"We've seen the relationship between dollar and gold hold pretty steady," said Chris Gaffney president of world markets at St Louis-based EverBank.

In early trade, the US dollar index fell on worries over a possible US government shutdown as global investors sought to diversify their holdings into other currencies. Shortly after, the greenback recovered some of the losses.

The 10-year US Treasury yield hit its highest since March 2017 at 2.61 per cent in European trade, pushing euro zone counterparts higher.

Gold is a non-yielding asset so rising yields on the bond market pressure its price.